Disposition of the appeal
26It is necessary to deal first with the challenges to the findings of primary fact and then to address her Honour's conclusion that the respondent had provided a satisfactory explanation.
27The respondent gave evidence that on the day after the accident whilst she was in hospital she telephoned her mother and told her what had happened. Her mother told her that there was likely to be insurance on the car and that she or the applicant should speak to the insurer and tell the truth as to what had happened. The respondent explained that she spoke to the applicant instead of the insurer because she was in severe pain, taking morphine, drowsy and facing a series of operations. In this same period whilst she was in hospital she also came to an agreement with the applicant that she would pay the medical expenses rather than the respondent "go to the insurance company" (White Book, pp 243-245).
28This conversation with the respondent's mother established that at an early stage she was aware that there was likely to be an insurer to whom the accident should be reported. She was also reminded by her mother that she should tell the truth as to what had happened. The fact that the respondent also remembered this conversation indicates that during this early period, she was able, at least on some occasions, to think clearly and communicate and to later remember what had happened. Each of these matters was relevant when considering how a reasonable person in the respondent's circumstances would have behaved and responded.
29The respondent agreed that she made a claim on the OSHC insurance in about September 2007 (White Book, p 245). The primary judge's finding that this happened in February 2008 was in error: cf [20]. A claim form was completed by the applicant and signed by the respondent. At the time she signed that form the respondent knew that it stated that the accident "was not due to a motor accident". She also appreciated that the reason that the OSHC insurer would pay was because the accident had been reported as due to her falling down or from stairs (White Book, pp 245-246). The respondent agreed that it was because the insurer had been told that she had fallen down stairs that it had agreed to pay. In other words, the respondent knew that the insurer had been told an untruth and that it had agreed to pay on the basis of that untruth. The respondent points out that it was not squarely put to her in cross-examination that she appreciated that the insurer would not have paid if it had known that her injuries were suffered in a motor vehicle accident. That is so. However, her evidence was sufficient to require a conclusion that she had participated in the making of a claim on the insurer which she knew was not accurate in a significant respect. The primary judge should have found that the respondent had deliberately deceived the insurer: cf [25]; and that she did so in September or October 2007 and before any conversation with Jonathon about the availability of a claim against the motor vehicle insurer: cf [26].
30The primary judge also found that the respondent's continuing delay in seeking independent legal advice was the result of misinformation provided by the applicant: [32]. The first occasion when that was held to have occurred was in February 2008 during a conversation in the University library: [21]. The respondent agreed in cross-examination that at this time she was exploring whether she should tell the insurer about the accident and make a claim for compensation. That she was doing so is consistent with an appreciation that there was an insurer and that she was entitled to make a claim against it in respect of the accident. The applicant told her that the insurer had said to Jonathon that she could not make a claim because there was no proof that the accident had happened. However, this was not the reason the respondent gave as to why she did not pursue any claim. She said that she did not want to get legal advice because she was concerned that if she did she would have to make a claim and sue the applicant who could, as a result, get into trouble. It was for that reason, rather than because she did not think that she could make a claim, that she continued with the arrangement with the applicant that she would get payments from the OSHC insurance, with the applicant and her family making up the difference (White Book, pp 248-249).
31That this was the reason why she did not notify the insurer or pursue a claim in February 2008 is consistent with her subsequent conduct in doing so only in November 2009 after the applicant had indicated that she could and would no longer honour that arrangement. It is also consistent with the respondent's evidence as to what she had told her mother when she had returned to South Korea earlier in November 2007. At that time, she explained to her mother that she had not told the third party insurer about the accident because she had not wanted to get the applicant into trouble (White Book, pp 246-247).
32The respondent gave evidence that after February 2008 there was "conflict" between her and the applicant because moneys had to be paid in advance for the provision of hospital services and she had to pay them using her father's credit card and then "chase" up the applicant. In September 2008 the respondent telephoned the Korean-speaking lawyer because the applicant would not agree to continue to pay for her to have surgery (White Book, pp 249, 253). The respondent told the lawyer that she had not made a claim for compensation because she did not want to get her friend into trouble. That was consistent with what she agreed was the position in February 2008. He advised that if she did not want to sue the applicant, she should speak to the insurer. She did not do so. Instead, she spoke to the applicant who told her that the insurer had "denied the compensation". Because she did not want to sue her friend she "gave up" (White Book, p 253). She did not give up because she believed she had no claim to pursue. Her subsequent conduct was only consistent with her believing otherwise.
33By November 2009 the applicant was not reimbursing the respondent for all her expenses. She had been paying either partially or not at all. The applicant told the respondent that she could not afford to pay any more. The respondent decided to seek legal advice after the applicant "had broken her promise" to pay medical bills. She told the solicitor to whom she spoke that since the applicant could not afford to pay, she did not care what might happen to her (White Book, p 254). Within a week or so she gave notice of her claim.
34This evidence does not support the primary judge's finding that the respondent's continuing delay in seeking legal advice was the result of misinformation provided by the applicant. Whilst the respondent may have been misinformed as to whether the third party insurer had denied any obligation to pay compensation, the reason why she did not seek independent legal advice was that she was concerned not to get her friend into trouble and was prepared not to do so whilst she was receiving payments from the OSHC insurer and had an arrangement with the applicant under which she was paid the balance of her medical expenses. When it became clear that the applicant could or would no longer perform that arrangement, she sought advice and acted on that advice.
35The primary judge's conclusion that her explanation was "satisfactory" requires reconsideration in the light of these further or different findings of fact which should have been made. In doing so, it is not relevant to take account of one matter to which her Honour made reference. That was that there was no suggestion of prejudice to the applicant or her insurer as a result of that delay which was said not to have been excessive: [33]. As Gleeson CJ observed in Russo v Aiello (see [25] above), the question is not whether the delay may be excused as not prejudicial; it is whether it was "justified" in the relevant sense.
36A reasonable person in the respondent's position would not have persisted in delaying notifying the insurer of her claim beyond late 2007. She was no longer hospitalised. Whereas she may have been confused and heavily sedated during her earlier period in hospital, that was no longer the case. Whilst she was young, in a foreign country, not familiar with local motor accident laws and no doubt concerned for the welfare of her friend, the respondent nevertheless appreciated that there was an insurer against whom a claim could be made and which should be notified of the accident. She also knew that there were solicitors who could advise as to what she should do. She knew that a false story had been told at the hospital. The applicant had agreed to meet her medical expenses. The respondent then agreed to participate in the making of a false claim against a different insurer, albeit encouraged by the applicant to do so.
37A reasonable person in those circumstances is not to be assumed to have done likewise. Reasonable conduct may involve mistakes and errors of judgment, particularly by people who may be young and fearful or pressured. However, those errors, when subsequently appreciated, may be corrected. Reasonable conduct suggests rational and straightforward behaviour, not behaviour calculated to mislead or known to involve falsehood. By late 2007, although a person in her position might have remained concerned for the position of the applicant, that person either would have notified the insurer or, more likely, would have taken a solicitor's advice. Instead, from October 2007 onwards the respondent received significant benefits from the OSHC insurance. The objective evidence as to its terms established that the respondent would not have received those benefits if she had disclosed the true cause of her injuries.
38Having regard to the serious nature of her injuries, the absence of any prospect of payment from another insurer, the overwhelming likelihood is that the reasonable person in her position would then have been advised to and would have notified the insurer. That would have occurred within six months of the accident. Instead, the respondent delayed for a further two years. That delay occurred because the respondent was in receipt of payment from the OSHC insurer and had an arrangement with the applicant in relation to payment of the balance. A reasonable person in her position would not have been justified in that delay because that person would not have joined in the making of a false claim on that insurer and would have acted as I have described above. The attribution of such conduct to that hypothetical person takes account of the object of the legislation that claims should be notified promptly and without regard to the consequences for others whose liabilities may be insured by the third party insurer.
39For these reasons, her Honour erred in concluding that the respondent had provided a satisfactory explanation for her delay in notifying her claim. The appeal should be allowed and the order granting the respondent leave to commence proceedings should be set aside.
40The formal orders I propose are:
(1)Grant the applicant leave to appeal.
(2)Appeal allowed.
(3)Set aside orders 1, 2 and 3 made by the District Court on 30 August 2011.
(4)Respondent to pay the applicant's costs of the application for leave to appeal and of the appeal.
41DAVIES J: I agree with Meagher JA.